Voyager Creditors Hit with $5.1M Invoice from Law Firm

The committee of unsecured creditors for Voyager, a company that fell victim to the cryptocurrency market’s downward spiral, is grappling with skyrocketing legal fees. McDermott Will & Emery, the legal team representing the creditors, has recently submitted an invoice amounting to $5.1 million. This sum adds to the mounting compensation, totaling $16.4 million, which surpasses the initially projected amount of $11.2 million established during the restructuring process.

While creditors have contributed $8.9 million towards these costs so far, concerns are mounting regarding the diminishing funds available for distribution.

Creditors Left Disconcerted- Here’s Why

McDermott Will & Emery’s invoice revealed that their lawyers billed an eye-opening $1 million for 970.9 hours of labor connected to the plan and disclosure settlement. This particular billing stands out among their other notable charges. The legal team’s efforts involved engaging in meetings with potential buyers, holding discussions with the Debtors about potential sale possibilities, and addressing concerns expressed by other stakeholders.

Also Read: Voyager Digital Releases Recovery Plan With $1.33B in Assets at Hand

Unfortunately, despite their efforts, a previous agreement for the sale of the company’s assets to FTX fell through, resulting in significant expenses during earlier fee periods. In the midst of these challenges, Voyager had already paid $1.1 million to Kirkland & Ellis, the legal representation for the exchange in the court case.

2022 Was a Chaotic Year

Voyager’s bankruptcy filing in July 2022, caused by substantial losses due to the collapse of the Terra ecosystem and the general decline in the cryptocurrency market, was just one among many prominent crypto collapses that year. The fallout from these collapses intensified governmental scrutiny within the sector.

In March 2022, seven American states issued cease-and-desist letters to Voyager, citing concerns over the company’s unregistered securities in the form of interest-bearing cryptocurrency accounts.

But Why Were Law Firms Thriving?

The 2022 market slump proved to be profitable for law firms, with reports indicating that companies like FTX and Celsius paid over $200 million and $50 million, respectively, in legal expenses during this period.

However, critics argue that the substantial amount dedicated to legal fees ultimately reduces the funds available to creditors, prolonging the already arduous legal proceedings.